>> market is really risk

seeking. >> economic activity around the world throwing over. >> the fed is going to have to move until something breaks. >> you have to run faster to stay still. >> it wouldn't surprise me if we see a recession very soon. >> this is "bloomberg surveillance." jonathan: good morning -- tom: good morning, everyone. we are on radio and television. forget about the summer doldrums. this week, most entertaining with the ecb meeting front and center of before that we have to reframe the fed game with a poignant american consumer. jonathan: for me it was never about 75 or 100 it was about how far they would take it. for percent in the city or well short of that, as the economy slows down? jonathan: there are

two americas at 0.9% growth -- tom: there are two americas at 0.4 with american confidence decline from politics with a poignant market with day after day recently and a lift off the bottom. jonathan: there are two different ways of interpreting the data. nominal terms or real terms and that's the epicenter from last week where the real terms are not great but the nominal terms are good. tom: kailey leinz, infra lisa. john hits it perfectly, inflation-adjusted versus nominal rate. earnings bringing nominal revenue growth. kailey: bank earnings are just wrapping up this morning, but really the theme throughout that as we hear from the executives at the big bank is the consumer is resilient with bank of america out there talking about the highest order of consumer spending ever. jonathan: exactly, nailed it.

absolutely perfect. this is the juxtaposition that we have right now. a single line like that from a major bank versus the levels of gloom that we have to consider. tom: the average number -- jonathan: the average number of the consumer, bank of america, the research division did some work on this with the lower income threshold in america's -- spending close to 10% of that monthly wallet income on gas and it might getting a bit that are in the move that we have seen over the last month, but that's the story of the last year, getting's. jonathan: letting you look at equities, oil has a lift on west texas for a second. jonathan: we have to bounce from that story at the end of the month with futures in an outperforming nasdaq with yields just a little bit higher today. the 10 year wasn't the story last week with yields lower.

crude is up as well, crude commodities getting slammed over them last month or so. up 1.85%. jonathan: and we stash tom: can we start -- tom: can we start the week under 25 of two truth -- 32 being like the new 40. jonathan: annmarie: is it -- jonathan: is it the new volatility? we can ask our next guest. ritika: -- tom: 24.82 as well. income is always in every case outfront. fish interpreter liz is at morgan stanley. what can equity stock market players learn from your world of fixed income? >> what the equity markets need to focus on is what's being

priced indoor changing. we are in an extremely independent world where yesterday the fed had an action function that we were spending a lot of time on and that's really where my focus is on, thinking about the income data and what it would mean to central banks. jonathan: shouldn't that reaction function be well-established by now? >> in a normal circumstance it could be more but we are in a world of dramatically different, it's dramatically different. moving from policy to past policy withdrawal and support withdrawal. that's the kind of economic activity that we are seeing now. somewhat unprecedented. take last week for an example.

we had hot trends with so-so retail sales on a different trend at the university of michigan data. it's not an easy time for anyone , central bank in particular. jonathan: you've been talking about the increased possibility of a recession. let's tie the stories together. at what point does the fed start to pivot towards prioritizing output numbers growth at the extent of bringing down inflation? >> we think that until the end of the year the fed is on the continued hiking path in july with the 50's on the formal in the 25 getting to the 352 the 375 by the end of the year and

we think that is where we will peak at the data consent. kailey: there's reacting to economic data and then there is reacting to economic markets. there be credit caused by the fed pivot? >> i don't think so. i think for the credit market signals to change their reaction function, it would have to be default with a lot of access to past market and neither of these do we expect to see in the midterm. assets are even more important, keeping them robust is important in the situation and we see that mainly very strong. companies do not need to come to the market that much considering the high yield is at 10% of the high-yield bond market that's

due for refinancing in 22, 23, and 24 with a preparation for securities not being that much to make the job of the fed more muted. jonathan: does this -- kailey: is this appropriately pricing the scenario being laid out? >> we don't think so, yet. even in this garden-variety recession we saw in the past a high yield spread where you could make some arguments that the quality has changed, so maybe if you know that number, but we think the fed could make it wider to reflect this, you know, the slowdown in economic activity but we are not there yet. jonathan: have a number in mind?

>> 300 plus range. -- 700 plus range. jonathan: there we go. the widest so far has been 580. that's an extra 120 that he's looking for. kailey: to his point, he doesn't think that things will get so bad that there's a fed but to get back in and that's the difference, this is a federal reserve that probably will not lynch at that if things are not as high as we have seen in the previous parts of the cycle. tom: what is that, in the wide, is that my waistline? jonathan: no, that's the extra compensation that they would have to pay to get you to purchase the risky debt and how we have traded in the secondary market. in the difference between the two spreads, tom. narrow and getting tighter and expanding getting wider. you would say the widest point of those spreads, time. -- tom. tom: do we need a kaylee cam?

jonathan: she looks less gloomy in the morning. tom: less gloomy than everyone. jonathan: just as annoyed about being on air with us but less gloomy about the world. [laughter] tom: i don't have a great affinity for this profit model. coming off, netflix, from an american standpoint, sort of the error rating, this is not a normal earnings report. jonathan: it's not but it hasn't been all year. just bringing up those earnings surprises, the one-day price-performance that you were speaking of, april 19, stock down 35% after results on january 20. down 27.9% after results. we have talked a long, long time, having, about how many streaming devices we have to pay for. tom: she wants a name change,

she wants to be called 12, i don't know what that means. the stranger things, john, the gray man, i thought in the movies. they are spending like a jillion dollars trying to, remake things. jonathan: that's after the close tomorrow. kailey: especially with new subscribers. jonathan: i could do without netflix, that would be the one to go. live sports, i pay a lot for those. i think that netflix would be the first to go. do you think? jonathan: netflix is real tv, come on. it is. this is careful research.

jonathan: that's kardashians, if you are interested. i have watched the whole season. tom: do you realize that tomorrow we have to promote the crypto show? jonathan: will you even be around after that? kaylee won't have you back. from new york, this is bloomberg. ritika: keeping you up-to-date with news from around the world, this is ritika gupta. increase in oil output after joe biden's visit to saudi arabia, telling cvs that he's confident there will be a few more steps in the coming weeks with officials saying that any decisions to pump would be remained within opec on august the third. sky news canceling the final debate between third-party candidates and prime minister boris johnson with two of the

five pulling out of the event after last night's debate turned personal with rishi sunak accusing them of socialism, eliminate being one of the candidates today. the international monetary fund said they would cut global economic growth outlooks substantially in their next update after the g20 finance ministers ended their meetings in bali without agreeing on a communique with the imf downgrading their outlook for the year at 3.6% after russia invaded ukraine. indiana police say a man with a rifle opened fire in a mall food court, killing three people according the to this -- the authorities that shot him killed the attacker outside indianapolis. boeing has fired its opening shot at the international airshow outside london with

delta purchasing 100 of their jetliners in a deal valued at 17.6 billion dollars, there are usually steep discounts on these orders, airbus expects to announce some big orders. global news 24 hours a day on air and on quicktake by bloomberg, pow

>> every other currency is going down versus the dollar.

we have inflation and a central bank with rates cycling aggressively and others are starting to blink. the dollar strength will ultimately weaken our earnings and our economy and get inflation back down to some work these other economies. tom: what did -- jonathan: i think he called you john briefly. in that conversation. tom: i take it down the street, walking. jonathan: just loving it. i get called tom. futures are up on the s&p 500. who is more insulted? tom: kailey, she has to be here [laughter] . jonathan: the stock is up 3.6%. tom: dow futures are up as well. right now, and this is a joy for us to welcome the minister of the presidency in south africa, but far more in the turmoil of

american political economics the upset of developed central banks there's what's happening in emerging markets. looking at the prism of south africa through his experienced eyes. thank you so much for joining us here today. i need to go to the reality that our work, our medical work on covid came out of the johns hopkins university and this is very much on south africa. you have lived covid, you replaced a senior official who at age 62 died of covid. how immediate is covid to south africa and what is the covid illness look like for south africa in the next six months? >> thank you very much for the opportunity to speak your viewership. so far, so good. the last time i looked, we seem to have everything going down.

that's the reason we lifted restrictions as far as covid is concerned and encourage people to actually keep being on top of the communicable diseases in the traditional way. just this morning when we seemed to have found a new subvariant and it is something we are going to look at, but so far, so good. we are only recovering post-pandemic. and the economy we are dealing with, more wicked than it was before pandemic, that we can say with confidence that there are indicators that have demonstrated that we are actually on the border of leveling up with a pre-pandemic situation.

tom: when you walk into a room you are the boss in the room on covid. i can see that with your experience. is china getting it right? or the western world? >> many people have been getting it wrong and as far as i'm concerned, south africa has responded very positive the with regards to staying were lateral before covid. it's a phenomenon tuesday worried about. access towards clean water. keeping on washing hands. the issue of virus is an issue that is not predictable. tom: it used to be a 5000 mile trek to sri lanka and now the images of them collapsing are tangible. you have south african lands in

disarray like many other emerging market. how immediate is the food, the inflation, the economic unrest in south africa? something that you are focused on urgently or can you manage these challenges forward? >> the socioeconomic situation in our country continues to be a huge threat. worse now with the global environment. but you have big economies like the united states having high-end nation, which has got potential spillover. what encourages us is the forecast for south africans, it gives us the data in projection of about 4.9, 5.7, five point 0, 5 .7, 4.7, in the third year. in other words, everything is in the same range as a part of the

forecast of inflation being concerned, nothing above six and of course, the treasurer is the projection outlook that gave us 2.1 growth this year, which is expected over 1.8 depending on consumer expenditures. tom: it's a day to remember for nelson mandela, traveling to attend different events there in honor of mr. mandela. he was anticorruption, as anticorruption as any of us have ever seen. what can your government do to make south africa be much more aware of corruption and moving towards the practice of legal affairs?

>> this is one area where we work in memory of his commitment to clean government, to prosperous humanity. to human coercion. we have demonstrated particularly when this president took over 2018, taking into account that we were actually confronted with the state capture of 10 years when this president was in 2018 admitting that he intended to look at residential institutions now. improving. not yet where we want it to be. that is why we are amassing energy within the public and private sector, trying to work with the private sector so that we can improve the situation. the zone commission that have

been glib, it had been unprecedented and we did not edit it. just treated the website as we planned to put together that implementation plan. tom: we are out of time with -- for one reason only, your entourages over there saying you to go to the united nations. thank you for joining us from the nation of south africa. jonathan: on this international nelson mandela day, tom. coming up, equity futures are positive will catch up with ken, a man who needs no introduction and i will give you some news on gas numbers that came out a few moments ago with by reuters. that's up next. this is bloomberg. ♪

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jonathan: live from new york city, welcome. the method 100 up .8%.

crude is positive by 2.2%. the focus very much on europe ahead of a big date on thursday for the continent. euro-dollar 1.0122. this is the noon from -- news from reuters, gas supplies to europe to at least one major customer according to reuters. some of this is backdated. gas pump could not fulfill its supply obligations owing to extrude mary circumstances outside of control. this is reuters reporting again, so the letter concerns to germany. in some ways, not much has changed. nord stream one down for maintenance, set to come back online only have to work out how much gas is going to tom: come through it. tom:an amateur hour, i'm speaking as an amateur, this develops and you got to believe

it is almost a benefit for mr. prude to get this out front of ecb benefit. jonathan: is a reasonable back or an excuse? tom: the ambiguities of the moment. right now and always a joy, one of the founding gentlemen who we have said you can do this, kenneth rogoff joins us. many years as a chief economist at the imf. a few books people have been forced to read as well. i want to go to one of the great algebraic books, the giant wendy carlin of the university college of london with the effort on the three equation system. we have just had a natural disaster, we have had a massive covid fiscal impulse.

what does your world from a massive increase in the fiscal, a massive increase in debt? >> i think a lot of possible -- policy of the past couple of decades and academic thinking of literature was predicated on we would never have a war, never have a big supply shot, interest rates would go up and there would never be inflation and it is happening. we have to make adjustments that people have not seen and the long time. people really worried about inequality. it is going to be a heavy lift to try to treat this like a classic shock. tom: have to turned the road

off. david speaks of a dollar stronger. here we are. how do you actually weaken the dollar? >> the dominance of the dollar in transactions would be there whether there are $150 or opposite. that is given. right now, there is this concern that no matter how troubled the u.s. is, there are other countries in worse shape. i think a lot of countries are having to react because inflation goes up when the dollar strengthens.

paradoxically, we don't get that much benefit in the united states from a stronger dollar. but the rest of the world has to react. >> are we on the verge of a currency crisis in any emerging markets? kenneth: currency has certainly fallen. certain at risk of debt crises in places like turkey and middle income emerging markets. my co-author and colleague at the world bank's warning that there may be banking crises and that may lead to currency crises in principle. it is very stressful.

having currency fall and inflation go up and having to raised -- having to raise interest rates, the position of emerging markets is really tough. kailey: and do rate hikes fix that or do you need direct intervention? kenneth: i think they are going to do a mix of both. rate hikes helped but a lot of these countries don't have the kind of frictionless capital markets that we have certainly in the united states so they are able to intervene. but you can only do that for so long. you cannot do that indefinitely. kailey: to the currencies have a role on wondering how you differentiate.

kenneth: not a simple question. if you think about the united states, you have to ask why they are doing it because we have accomplished a lot of the same way in the current system by making tweaks. if you did it too well, you had a retail central bank central currency, i think they are straw central banks but it is very different, something that is going to be information and cryptocurrencies where the general idea is to try to make it expensive to track you. i think central banks are way behind the curve in regulating

cryptocurrencies. tom: what is so important here is the why. uni are on the same page. we both agree where is regulation, fine. what is the why of the delay? kenneth: i think it feels like the 1990's when the financial system was inventing all these financial engineering devices and saying catch me if you can, regulate me if you can. i hear very much the same things from young cryptocurrency pioneers. there were a lot of ideas but they are wrong they can be regulated. we saw the super bowl with 20% of the ads. there are states like colorado and florida would seem to want

to be the next el salvador. they are giving away a lot of money. they're pushing back hard. tom: one final question. is that in the next edition of rogoff? kenneth: i think it is something that works. i think other central banks of the toyed with the have backed off and interest rates rise. jonathan: did you ever think we would have a central bank that on 50% of the outstanding bonds? are there limits to that? kenneth: in a way, there are no limits in the sense central bank is owned by the government. if interest rates rise and

countries have very short-term borrowing, they've either got to allow inflation to go off or start unwinding a lot of that. and the global rates rise, and i think they will continue to for a while, we are going to see a lot of pain. jonathan: lucky to catch up with you. kenneth: thank you for having me. jonathan: just some of the numbers on the balance sheet between the ecb, fed, boj. tom: what is amazing about the bar chart, the u.s. is way over and it is a paragon of responsibility. jonathan: it is when you compare the balance sheet and percentage of gdp. the boj is like 120% of gdp. pretty wild.

tom: i take great deference to these scholars. i have a hallway at home full of books. none of what we are living right now is in any of those books. jonathan: one small correction by reuters. seen by reuters on monday. saying that country is germany. tom: there it is, i'm looking at rotterdam coal right now. you can do that with the search engine of the bloomberg professional service. let's see what the pop is this morning. one or two days, a little bit of

webbing looking to see what lagarde does. frankly waiting to see with the individual country jonathan: a number of reasons. we have wrapped up wall street numbers. the stock is higher. we will catch up in the next hour. ritika: bank of america is expected to take a $200 million fine released for the use of unapproved personal devices that will be among the penalties imposed on other wall street banks. finance firms are required to monitor communications involving their business. in the u.k., the labour party is

blasting the conservative party's economic agenda. >> for 12 years of failure and i think any sense that the conservative party is the party of britain has been blown out of proportion. hundreds of billions of pounds of unfunded spending commitment. there is no way the conservatives can claim they are the party of economics. ritika: conservative mps vote today to narrow the candidates. the uk's bracing for a heat wave. 104 degrees fahrenheit. that is hotter than the forecast in madrid, rome. all of the -- gazprom said it

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>> the duty you got last week suggest core inflation is rising well ahead of most people's expectations. i think it is premature to believe inflation is really going to come down quickly. tom: peter oppenheimer, a resilient offices -- optimist. futures up 26. not up like they were two hours ago but after a number of days here, looks at the market.

kailey leinz in four lisa abramowicz. mr. farrow's on assignment getting ready for his effort at 9:00 this morning. arguably, after can rogoff, the senior officer from south africa , this is the most important interview of the day. the distinctive feature of this is he has called bottom in june for the equity market. >> i think the most important thing is what is going to happen to oil prices. we had jay powell who told us he is focusing on headline inflation. as opposed to core which we all

thought was the key monetary policy instrument. what is important now is whether all prices have upside or downside. in my view, there is going to be a flippant correlation. tom: ed morse very much in the camp says here the geopolitics, the tendency to lower oil prices. the other says there will be em demand. will that not be there? marko: everybody thinks once zero pop -- zero covert policies over, there is going to be the slit in japan. household sector in china is experiencing what we did in 2009, 2010 so i don't think there will be significant left off. kailey: i'm just paying

attention to headlines coming out of reuters. whether or not that is going to reopen fully. if gas is continuing to flow to europe and prices come down as you are indicating, what does that mean for the euro? marko: huge lift off. during the euro area crisis, which was a moment when we literally were wondering whether the asset under question would even exist, the euro never came to parity. i think there has been a pricing in the applica lifted scenario. when you think about what is going on in europe, the worst case scenarios priced in, but the problem for russia is while they're playing this game of chicken with europe, their

demand for natural gas is europe and they don't have a way to alternate that demand. their transmission mechanism for natural gas are pipelines. they are nailed to the ground. kailey: where else in the market would need to reprice to consider that because the narrative seems to be that europe is going into a suggestion. marko: markets discount the features six to 12 months ahead of time. i would say when the economist put on their cover, the bear, chasing little red riding hood to the pipelines as you probably have seen the sweet, i think it is fully price. tom: you speak about and write about the nonlinearities of putin and what we see in the war in ukraine. you polarize a stalemate. update us on that. marko: what is very important

for investors to understand is they are not looking at an engineering problem. we don't know exactly how the war ends. but you notice did not end? the korean war. it is literally still going on 69 years later. all the market needs is a stalemate and a signal that russia is satiated with don bus. after that, markets are going to discount. i think you have a line of control. well ukraine will continue to be armed by the west. it is a different situation to try to have an offensive operation against entrenched russian troops which means you have a frozen conflict for the rest of the decade. what is important about that is not russia or ukraine or even the u.s., it is politics in europe. one of the things i emphasizes the politics in europe are going to change if this were gets bogged down in don bus.

if these big cities are not newspapers anymore, european policymakers will lose their nerve. you will see a toning down tensions between russia and europe. kailey: also a fraying of the solid alliance we have seen take shape in a real way i always tha transatlantic alliance, this idea that we have rebuilt the in the west, that was always sort of a spur of the moment. at the end of the day, u.s. has much higher risk tolerance to conflict in europe because ultimately, the backlash is happening in europe. europeans have much lower risk tolerance to that. i do think there is going to be a fraying on the alliance between europe and the u.s. tom: don't be a stranger. i love the synthesis of optimism on the equity market in the first-rate geopolitical analysis as well.

green on the screen is becoming a common phrase. kailey: at least as of late. we will see whether or not this is something that sticks around or it's just a bear market rally. likely, the earnings we get over the next several weeks we'll have some influence, but so much conversation about the risk of recession and yet the tone we are getting out of the banks is overwhelming confidence. the ceo saying there were consumers resilience is spending up 10% in the first two weeks of july. tom: from a not tom no -- tom no that's not fix is 72%. kailey: it has been brutal. a huge part of that came after their last earnings report in april. it will be interesting to see with the share price reaction is to those earnings.

netflix kicking off the big tech companies tomorrow but the bulk of the market caps will be next week when apple and the other giants report. tom: the close will be covering that. one comment here. bitcoin is a bottom. kailey: we will see. bloomberg crypto tomorrow. also the bloomberg crypto summit so tune in for that as well. tom: i can't go that long. stay with us this morning on radio, on television. this is bloomberg.

jonathan: a big week of central bank coming up. the countdown to the open starts right now. ♪ >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new yor